Category Archives: Customer Culture and Profit Link

12 Lessons from a CFO that created a Customer Culture in the finance function

Culture Transformation

In my last blog post I described the customer transformation experience of the Finance & Administration support function in Telstra, a $25 billion Australian telecommunications company. Their CFO developed and implemented a vision of a “value service culture” (known as VSC) in which leaders and individuals viewed their stakeholders as customers and found ways of increasing the value (actual and perceived) they delivered to them. This transformation created a $15 million bottom line impact

In this post I summarize their 12 key learnings from this transformation.

  1. The senior leaders’ passion, ‘walking the talk’, ongoing monitoring and follow-through is critical to success
  2. Initially there is need for a Customer Engagement Council that guides the culture change. It works best if it is relatively small (5-8 members), has a mix of senior leaders and opinion leaders and focuses on overall planning and key initiatives. As embedding of new behaviors occur and support systems are implemented there is less need for such a group as responsibility is spread throughout the organization.
  3. Linking a culture change to a long term corporate or business strategy creates relevance and reduces perception that it is a fad.
  4. A set of guiding principles that reflect an emphasis on corporate values such as empathy and transparency is important in changing mindsets to embrace customer needs. It is necessary to continually emphasize these principles with practical examples to create the new cultural norms.
  5. Creating an emotional connection to the culture change and acceptance of a logical reason for urgency to change takes time in a large group. Creating a sense of fun, competition and reporting of “wins” in the short term can accelerate the diffusion.
  6. For Corporate Support groups that have limited experience in thinking about what they deliver from the customer’s perspective and lack a mindset related to delivering perceived value, the launch phase should provide concrete guidelines at the outset. A comprehensive communication strategy that continually provides examples of the new desired activities usually needs dedicated resources and focus to provide clarity.leading_culture_transformation
  7. Collaborating across lines of business can speed the desired cultural change across an organization. In disparate functions it takes time to find common ground for sharing. An initiative like VSC creates the common ground. Cross-fertilization of best practices makes the cultural change more exciting and effective and demonstrates to new staff the relevance and scope of the customer responsive culture. It also promotes collaboration and innovation.
  8. A clear framework and measurement toolsare vital to guide improvements and reinforce desired behaviors. These include:
    1. Customer culture measurement as a starting benchmark, then for tracking culture improvements
    2. Customer satisfaction metrics that point to areas that need improvement
    3. Customer focus behavior norms incorporated in manager and staff reviews and their key performance indicators.
  9. Technical people who have little experience in treating colleagues as customers will require a set of new tangible skills as well as an emotional connection that sees personal value in doing things differently. The emotional connection is essential for people to take “ownership” of the customer’s problem and follow through with a solution.
  10. Well structured workshops are valuable to alter mindsets and provide skills. These should be implemented as early as possible to provide immediate ‘how to’ concreteness to the desired change in behavior. Workshop attendees who represented all lines of business and all levels were generally inspired by the VSC initiative. Train-the-trainer follow-on enabled them to reinforce their skills, train others and leverage the benefits for the wider group. Also, management workshops to evaluate their own VSC behaviors as role models were useful in presenting a common picture of VSC across the entire group.
  11. People at all levels need to understand that behavior change is difficult. It takes more time than expected to embed new behaviors in an organization, particularly those that require new skills as well as a new mindset. A strong ‘command and control’ hierarchy is present in many corporate support functions because of compliance requirements. It takes substantial and continued effort to break the “police” mindset to enable people to take customer initiatives freely and without fear. Initiatives emanatingfrom the lower levels in the organization need to be encouraged, nurtured and reported.
  12. Culture change can be effected more rapidly in smaller groups, particularly roles that are consultative and rely less on systems that may be unaligned to customer needs. This means that in large groups, the new culture mindset, skills and processes must be effectively taken into all of the small sub-groups as quickly as possible to have the greatest chance of making them stick.

A culture change that produces a customer responsive organization makes culture one of the most valuable assets of a business. It is a organizational capability that can and should be measured and the profit impacts assessed. The end result of this VSC transformation was annualized savings and benefits of $15 million after an 18-month period. These benefits increased as the customer culture became more embedded.

Interested to find out more about how to measure and manage a customer culture? Visit our resources page here.

Does customer focus matter in banking?

Customer Service in Banking Does it Pay?

Customer Focus in Banking Does it Pay?

A recent article in the New York Times highlighted one bank analyst’s view that “Spending time solving problems with people is not selling products…. Its wasting time”.

As a bank analyst his role is to review the bank’s financials and make buy, sell or hold recommendations to his clients. His statements came after having a poor customer experience at his local Wells Fargo. He lamented, “I’m struck by the fact that the service is so bad, and yet the company is so good.”

This particular analyst has a history of being controversial so what he says has to be taken with a grain a salt, however, does he have a point?

The analyst decided to change banks as a result of the poor experience. Did he expect other customers not to respond in the same way? By letting their feet do the talking?

This incident raises challenges relevant to all leaders trying to improve customer focus.

Would you use a single example of failure to conclude this is the way Wells Fargo does business? Common sense suggests the answer would be “no”.

Was this experience and an anomaly or symptom of greater problems? Was it a one off issue confined to one employee in a single branch or a sign of a broader cultural issue?

In Wells Fargo’s case the evidence suggests the former. Over the past few years the bank has a string of top place finishes in customer satisfaction independently measured by the American Customer Satisfaction Index.

Based on our research we know that companies with high levels of satisfaction are more profitable. The reason Wells Fargo is doing well is because of its customer focus not in spite of it as the analyst suggests.

Another question highlighted by this story is how important is “customer service” to the banking experience?

Customer service is part of a customer’s consideration set but it will vary in importance depending on the customer. Customers have different needs and will use the bank’s services in different ways. A customer looking for a mortgage will be more sensitive to the bank mortgage rate than one that only has a checking account. Some customers may never enter a bank branch. They conduct all their banking online. Customer service from them only becomes an issue when something goes wrong.

As a business leader what is more important to understand is how customer centric is the company’s culture. Am I setting sending the right messages to our team about the importance of customers? Am I role modeling the behavior that I know will make us successful in the customer’s eyes?

What do you think?

Is this a bank analyst just trying to be controversial to get publicity? Is it a one off or an early warning sign?

How Hawaiian Airlines has built a Customer Culture

Hawaiian Airlines Customer Focused Culture

Hawaiian Airlines – Customer Focused Culture

Charles Nardello, the SVP of Operations at Hawaiian Airlines, recently wrote about how they were able to drive improvement in the key metrics important to airline customers.

Hawaiian are now routinely ranked first by the US Department of Transportation among all airlines for on-time performance and fewest cancellations as well as garnering top marks for best baggage handling and fewest customer complaints.

How did Hawaiian achieve these outcomes? By creating a customer culture based on 3 strategies:

1) Really understanding the Hawaiian travel customer

2) Benchmarking Hawaiian on customer “moments of truth” regularly

3) Empowering Hawaiian employees to handle unexpected situations

Knowing your Customer

Hawaiian Airlines is infused with a customer focused culture that permeates everything.

“For every decision we make, from the most basic to the complex, the customer always comes first—they are the driver of our decision-making and strategic planning,” – Charles Nardello

A culture that brings the customer perspective to every decision acts very differently than a company where customers are an afterthought or are only considered when reacting to customer problems. At every level of the organization, whether deciding on which cutlery to use in the cabin or which markets to fly to, a deep understanding of the customers they serve and the experience they want to create drives the decision.

Benchmarking and Embracing Complaints

In order to benchmark, Hawaiian Airlines surveys customers every month on their experiences with the airline and factors the results into every employee’s bonus pay.

“Every employee receives a scorecard rating them on how well they’ve performed in interacting directly with the customer or, in the case of senior executives, on decision-making and strategic planning.” – Charles Nardello

It’s an approach that guarantees that everyone at the airline will remain focused on the customer. In particular they are focused on the key moments of truth that drive the most value for their customers. This includes check-in, boarding, the flight itself, baggage retrieval and how customers are treated via each stage of their journey.

The airline reinforces this customer focus via a streaming news ticker that runs on the lower part of computer screens and TVs  in break rooms and crew lounges. The ticker show unedited, unfiltered, real-time customer reaction via social media.

Nardello suggests that he is grateful for complaints as it provides the opportunity to do something immediately to improve.

Unfortunately most customer’s don’t complain they just leave and the company wonders what happened. In fact customers are more likely to complain to someone else about the experience than the company directly. This creates even more of challenge for a company to win them back.

If a reaction is negative, the airline addresses it immediately. As Nardello points out, “Our speed in addressing the problem could make the difference between retaining that customer for future flights or losing him or her forever.”

Empowered Employees

No company can prepare for every situation  that can trigger customer dissatisfaction, which is why those that excel at customer service train and empower their frontline employees to solve problems on the fly.

“We believe employees perform best when empowered to improvise and bring unmatched service to their customers in a sincere, personal way.”

This strategy has served Hawaiian well as it continues to be ranked among the very best airlines in North America. It was recently ranked 3rd most profitable on a pre-tax margin basis behind two other airlines know for high levels of customer focus – Alaskan Air and Southwest Airlines.

“If you can’t measure it, you can’t manage it.” -Peter Drucker

Measuring Customer and Market Culture

A new way to measure a customer or market culture

There is no easy and reliable way to measure market culture. Following the logic of management magnate Peter Drucker, there also is no easy and reliable way to manage it. But, that’s about to change.

For the past two years, we’ve been hard at work developing an organizational culture survey…one that’s more relevant and fundamental to performance than anything we’ve seen in the market…one that specifically measures market culture.

I’m happy to announce that development cycle is nearing completion and that the instrument will be unveiled for commercial use later this Spring.

Two weeks ago we completed a study with the instrument that included dozens of companies and nearly 1000 employees. We’re in the process of analyzing all study data, determining the level of validity and reliability and establishing correlations to business performance.

Because this is an exciting time for us (and should be for anyone interested in their organization’s performance) I’ll be posting periodic updates on the blog, letting you know what’s coming out of the research and how the instrument is progressing.

Lucas Coffeen

Project Leader

UPDATE: We now have a reliable and valid way to measure what many leaders call “Customer Focus” – essentially it is a culture the brings the customer into every decision point a business makes at every level. If you are interested to know more about the measurement tool CLICK HERE